Reaganomics: Revitalizing the American Economy

One of the most important aspects of Reagan’s time in office was his domestic policy. He knew to have a successful presidency and create a strong, the people of the United States needed to be cared for. His first goal was to turn the economy around from the stagflation it encounter in the Carter era. Stagflation is very similar to inflation. The main difference is that inflation is the result of a quick economic growth while causes the value of money to decrease with now economic growth. To accomplish the turn around, Reagan introduce his economic policy which became known as Reaganomics. Reaganomics was based in supply side economics. This economic theory says that lowering taxes through tax cuts increases revenue by allowing more money

Reagan rose into power after years of turmoil and the American pride was dipping. About a decade before he became president, the war in Viet-Nam was winding down and the troops were returning home to negative demonstrations towards their duty. Then, during the Carter years, America transitioned into a détente policy, which meant that the United States would try to ease the tensions with the Soviet Union by not expanding the military, but not doing anything to acting ease the tension. The idea behind this became known as MAD, mutually assured destruction, (Hannaford) which meant that both the United States and Soviet Union would maintain and even number of nuclear weapons so that if one would fire, the other would be able to fire back equally. Reagan completely disagreed with this philosophy and created a whole new policy when he became president. The foreign policy he established was to create the Reagan Doctrine. According to a speech by Peter Hannaford, the Reagan Doctrine was that America would support democratic movements in any Communist country until that country could enjoy the fruits of freedom (Hannaford). This meant that the United States would help any country who wanted to leave the influence of the Soviet Union and create their own democracy. Also, to counter the Soviet Union and end the Cold War, a race between the United State and Soviet Union to create the best technology and become the world powerhouse, Reagan increased military spending. Ronald Reagan knew that the Soviet Union was unable to keep up the United States in military spending and still having enough funds to fund their own economy to keep it stable. Reagan used this knowledge to convince Congress to increase military budget to build up technology, causing the Soviets decide on what to do. The United States had the funds to continue, but the Soviet Union could not keep up. The breaking point